Reinventing oneself is the watchword for most office buildings that have experienced a significant contraction in demand, as a result of the aftermath of COVID-19 in most world economies. In the case of corporate spaces, the pandemic exacerbated a situation that previously indicated an oversupply in the Mexican market, specifically in the capital.

At the end of May 2021, foreign direct investment contracted 29% compared to the same period last year, closing at USD 11,864 million, a trend that marked the reinvestment component in the country. While the GDP achieves a slight recovery of 0.8% over the previous month, it nevertheless fell by 2.8% when compared to 1Q 2019.

Industrial activity in general terms has recovered with a quarterly increase of 0.7% at the end of 1Q 2021 and an annual increase of 1.5%, as the percentage of vaccinated population advances and that companies that resumed activities have partly returned to their offices.

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At the end of April 2021, the unemployment rate in Mexico presents a cycle trend of 4.6%, a similar value of the previous month and 30 basis points below the value registered in 2020, this indicates that employment is reducing the gap that reached the most complicated point during the second quarter of 2020, when the cessation of face-to-face activity was implemented in most of the companies.

The pandemic and the economic consequences of the crisis continue to direct most companies to study and analyze operating and production costs, by evaluating the monetization of their fixed assets, including operational and administrative real estate.

The learning that both companies and workers have developed in the period of remote work, backed by the freedom that technology brought with it, faced the fixed work patterns to which they were accustomed. In addition to this and with regard to the legal framework, on April 23 of this year Congress prohibits the subcontracting of personnel, which leaves only this modality allowed for non-essential or permanent work of the companies.

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Both situations affect the internal reorganization of many companies that validated the need for physical space in case these workers return to their office work, determining who can continue from home and thus maintain a hybrid model that many will adopt by 2021-2022.

When analyzing the general results of the performance of the corporate market in Mexico at the end of May 2021, the increase in gross demand stands out, which went from 5.8 thousand square meters in April to 15.5 thousand square meters in May, with the capital concentrating 64% of gross monthly demand.

The rest of the cities nationwide began a recovery in monthly demand, Guadalajara with 2.4 thousand square meters and Monterrey with 2.3 thousand square meters, a sign of improvement in the performance registered in April, although at much lower levels. to those previously reported by these markets.

During May, buildings were completed in the cities of Guadalajara and Querétaro with 16.3 thousand square meters and 14 thousand square meters, respectively, which began to increase their respective inventories. The rest of the cities did not register the completion of corporate buildings, maintaining a similar pipeline from the beginning of the year.

In Querétaro, the Level Work projects in Juriquilla and Momentum in Centro Sur handle a current offer with different sizes from 30 square meters, in the format of half floors and complete plants close to 800 square meters.

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The perception of the developers in this fifth month of the year aims to continue with some medium-sized projects, such as the case of Querétaro where they began construction of a 7 thousand square meter building and the second phase of a building belonging to a recognized investor in the city, which maintains its commitment to this market under the premise of a speedy recovery in demand.

Querétaro and Guadalajara maintain a solid industrial fabric where they have developed a cluster around sectors such as aerospace or automotive in Querétaro and technology in Guadalajara, which could improve their performance towards the end of the year and the beginning of the next, which would lead to demand spaces for supplementary offices later.

In the capital, no Class A or B project reported the start of construction, so that one million square meters are maintained in various stages of execution and that they represent 9.4% of the capital's inventory.

The vacancy continues as a constant theme in the office segment and during the month of May it reached figures higher than those of demand and even those that had been reported in April. According to Solili's figures, just over 57 thousand square meters were vacated in Mexico City, almost 9 thousand square meters in Monterrey and around 2,000 in Guadalajara. Markets such as Querétaro, León, Puebla and Mérida reached figures of less than 100 square meters, which refers to a relevant decrease in the markets considered as medium at the national level.

Tijuana, León and Puebla did not show greater activity in demand, construction or new projects, although they have maintained progress in what is currently being built with adjustments in delivery times, as a way of adapting the final product to the new needs of the consumer.

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For this first half of the year, some companies will have already scheduled the return of a percentage of their staff to their new offices, such as the case of Loreal in the Mitikah complex or that of Microsoft, which will resume part of its reorganized activities at its headquarters in Montes Urales. In addition to this, there were cases in which corporate properties have been reconfigured to put them up for sale with the option to change land use, such as the former headquarters of the British Embassy in Cuauhtémoc that could qualify for residential use or those that were modified for be hospitals or clinics.

In general terms, developers observe an adjustment in delivery rates due to the adaptation of projects to health requirements, rationalization in costs and cash flow evaluation, with the support of some sales to maintain profitability and guarantee the settlement of the projects under the conditions set out for the investor.